Is it Possible to Use Your DVC Membership to Pay Your DVC Dues?

Filed in Annual Dues, Disney Vacation Club, DVC Resale, Points

14 Comments
Disney Vacation Club's Grand Californian

There is a strategy some Disney Vacation Club (DVC) Members have used to successfully use their Membership to not only vacation on, but also cover the cost of their annual dues.  The strategy is “doubling up” on points.

How does this work?

Let’s say for example, you determine your family needs 150 points to vacation each year.  Rather than buying 150 points, buy 300 points, and rent the other 150 points your family is not using each year through a company such as DVC Rental Store.  DVC Rental Store pays $13.00 – $14.00/pt.  Consider Saratoga Springs for example.  If the annual dues at Saratoga Springs are $5.60/pt. and you are receiving $13/pt. in rental revenue, then the renting of the 150 points can cover the dues for the entire 300 point Membership:

  • 150 points x $13/pt. from renting           = $1,950 rental revenue
  • 300 points x $5.60/pt. for annual dues  = $1,680 total annual dues

In this example, you can see that by “doubling up” the points, the dues for the entire Membership can be covered by the rental income from just half of the Membership.  It’s analogous to buying a duplex, living in one half and having a tenant rent the other half to cover the expenses for the entire duplex.

Disney's Saratoga Springs

Moreover, historically, according to Paul Little, who owns and operates DVC Rental Store, the demand for people needing points to rent is almost always greater than the points available to be rented out.  This bodes well for anyone considering a “doubling up” strategy to cover their dues.

Typically, resorts with lower dues will represent better opportunities for a “doubling up” strategy. Also, a few resorts, typically have a higher rental payout per point.  Below is a chart ranking the best resorts to use for rental strategy based on a ratio of rental income to annual dues per point:

Resort *Rental Income Per Point Annual Dues Per Point Ratio ** Avg. Price Per Point
Grand Californian $14 $5.61 2.50 $146
Bay Lake Tower $14 $5.62 2.49 $116
Grand Floridian $14 $5.90 2.37 $147
Saratoga Springs $13 $5.60 2.32 $82
Polynesian $14 $6.14 2.28 $147
Beach Club $14 $6.27 2.23 $106
Boardwalk $14 $6.47 2.16 $94
WL: Boulder Ridge $14 $6.54 2.14 $86
Animal Kingdom $14 $6.59 2.12 $83
Old Key West $13 $6.41 2.03 $77
Aulani $14 $7.03 1.99 $103
Hilton Head $13 $7.27 1.79 $64
Vero Beach $13 $8.11 1.60 $59
  • * Rental income assuming an 11 month booking window is provided
  • ** Avg. price per point is provided from disneydvcresale.com

It is important to note that some resorts costs more to purchase than others, and by doubling up your points, there is more money tied-up.  The chart above does show an average price per point for all DVC resorts when considering resale.  Additionally, like any rental income, earned monies from renting DVC points is taxable.  Regardless, “doubling up” on points may be a great opportunity for some, when considering you could vacation on a DVC Membership and potentially have your dues covered by renting half of your points.

Comments

  • David
    February 17, 2017

    Do you think that Disney will make enhancements to monitoring DVC contracts that are being used solely for profit making, and terminate those contracts where members are dumping points on the 3rd party rental market? I don’t think Disney’s intentions were to create this new profit making market that has come to life in the past few years. Do you?

    • Nick Cotton
      February 17, 2017

      David, you raise an interesting question, and thank you for posting this. No, I do not think Disney intended to create a profit making 3rd party investor market of people buying contracts to just rent them out. Proof of that is Disney already has a limit in place of 20 reservations per year per Membership. Could they possibly reduce that number? I suppose so, but I’m not entirely sure. Also, the intention of this blog is NOT to provide insight on a way to make a lot of money from commercial renting points but rather to show another way to handle the cost of Membership for a family looking to join or add-on points. Moreover, since Disney does allow for Members to rent their points on a limited basis (less than 20 per year) I thought this was worth mentioning as some families have proactively mentioned to me over the years they do this to keep their annual cost lower.

  • Robert Pontow
    February 8, 2017

    Nice article. First, I use Paul to rent points so consider me biased towards a great company. That said, the chart got outdated last week when Animal Kingdom points moved up to $13.

    The other thing to consider is how long the points will last. Each property has a different end year. The nice part of this is that you can also own points at different resorts. Don’t double up on one when you can get the 11 month advantage. Instead, buy 2 resorts and take turns renting points.

    • Nick Cotton
      February 8, 2017

      Robert, Great point about the recent change to Animal Kingdom. Paul is keeping me on my toes with payout increases, and that is a good thing! The chart is now updated. To your point about diversification, agreed, that is another valid way to rent points and get home resort priority at two different locations with the points you own at each respected resort.

  • Gene
    February 4, 2017

    Can u rent out points for 2018 or do they need to be in the current year – also how does it work what are my responsibilities ???

    • Nick Cotton
      February 4, 2017

      Gene, you can rent out points for not only the current use year, but you can borrow ahead from the next use year and rent those out as well. Regarding responsibilities, I would refer you to dvcrentalstore.com for the best answer.

  • Jason
    January 27, 2017

    It makes sense to rent any points you don’t plan to use to offset the cost of DVC dues in a given year, but it doesn’t make sense to buy twice the amount of points you’ll need with the sole intention of covering future dues. It would be smarter to save the cash that would have been used for those extra points and just pay future dues from that savings instead.

    • Nick Cotton
      January 27, 2017

      Jason, great point and I don’t entirely disagree with you. I think it can depend on each person’s situation and investment opportunities, which is why I mention this is a great opportunity for some but not all. Take for example, the 150 point example we used in the blog of Saratoga Springs. If you can get a consistent ROR of roughly 7% or more then I agree with your point. As 7% of the potential incremental cost ($82/pt. x 150 = $12,300) would be $861, which is greater than the current dues savings of $840 for 150 points at Saratoga Springs, and then the “doubling up” strategy just doesn’t work out as a best strategy. Otherwise, if you don’t have a consistent 7% or greater ROR opportunity or at least feel your consistent 7% or greater opportunity is relatively safe, I would at least consider the “doubling up” strategy. And I agree with your point about in general, of renting unused points you don’t plan to use is an absolute no-brainer for anyone.

      • Lloyd
        March 5, 2017

        This calculation is not entirely correct because the contract loses value to zero in 37 years. If you double up points you spend an extra $12,300 per your example to cover the dues. In 2054 your investment is gone. If instead you invested at 7%, you sitll have $12,300 in 2054. If you invested at 4.13% and paid $332 out of pocket each year for 37 years, you would have lost about $12,300, the same as the double up strategy. So beating 4.13% is quite doable and would have more money left over in 2054.

        • Nick Cotton
          March 5, 2017

          Lloyd, I agree with you if you were to hold the Membership until expiration and that was your only option. However, the vast majority of Members do not as we’ve already seen with the original owners of Old Key West from the early 90’s. In fact, many Members sell before even the 10 year mark, hence why Vacation Club Loans who do not record a mortgage do not offer loans past 5 years in length. Keeping that in mind the analysis could have included a potential resale value based on length of ownership. Moreover, if you look at a resale history of Saratoga Springs, you will see that it sells for more now than it did 10 years ago despite having 10 less years although this was not included in the analysis. This increase in resale value can largely be attributed to the power of substitution with the rising prices of Disney Hotel rooms. You could certainly take this theory of renting points to pay for dues and do a more in depth analysis with an assumption of selling at various years throughout ownership (as when the expiration date draws very near, perhaps under 10 years or so the resale value would likely begin declining despite inflationary increases to Disney Hotels) and the scenario of keeping it all the way to expiration (your example) . However, just looking at this theory with only the assumption of retaining ownership until expiration would not be a complete picture as there is always the option of selling to recapture some, all or perhaps more than the original costs. I do thank you for posting this, because it does bring up an idea for a Volume 2 of this blog where we perhaps show various ROR’s based on length of ownership.

  • Chris
    January 26, 2017

    Are you able to comment on how this would impact taxes in Canada?

    • Nick Cotton
      January 26, 2017

      Chris, from what I’ve read, as a Canadian citizen you are subject to U.S. income tax on any rental income you receive from U.S. real estate property. However, I would check with your accountant for the most accurate information and your best options.

  • Mike
    January 25, 2017

    What are the tax implications of renting points out?

    • Nick Cotton
      January 25, 2017

      Mike, it is rental income. Just like if you were renting a house to a tenant, you have to declare the rental income to the IRS.

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